Digital Transformation at

Royal Philips
1
 AGENDA
Of Presentation
01
1 Introduction Business Problem 2
Philips and It’s History 02 And Trigger Point
03
3 PESTEL and SWOT 04 Business Strategy 4
PESTEL & SWOT Analysis 05 & Blue Ocean Strategy

06
5 Value Chain Transformation 6
ICT & DFM Strategy Modular Arch with API

Key Takeaways, Q&A 2

 INTRODUCTION

Company History
• Founded in 1891 in Netherlands
• Started as Manufacturer of Incandescent bulbs
• More than 60 business in over 100 countries
• Product diversification including but not limited to
• Light bulbs
• Radio
• TVs
• Shaver
• VCR
• Laser Disk player
• Medical imaging
• Current CEO: Frans van Houten 3
BUSINESS PROBLEM & TRIGGER

PRODUCT
Product Diversification led to: CHANNEL
PHYSICAL DIGITAL

• Excessive internal complexity

• Loss of Operational efficiency PHYSICAL

• Working in Silos
DIGITAL

Trigger Point: 40% revenue Loss over

1st decade of 21st century

4
Value Chain ( 2011)

Firm Infrastructure
SUPPORT ACTIVITIES

Human Resource
` Management

Technology
Procurement

Inbound Operations Outbound Marketing Service

Logistics Logistics & Sales
Silos Not in sync
Less Efficiency with the
Redundant Data product
Multiple Tech division team

Multiple ICTs working in Silos

5
PESTEL

• Is a useful tool for understanding the “big

picture” of the environment in which you are
operating.

• By understanding your environment, you can

take advantage of the opportunities and
minimize the threats.

• This provides the context within which more

detailed planning can take place to take full
advantage of the opportunities that present
themselves.

6
 P.E.S.T.E.L
• POLITICAL: Not in scope of this Case study
• ECONOMY: Global Recession, Rising Healthcare Cost, less capital spending on
preventive measures
• SOCIAL: Lifestyle, Aging Population, High inertia of change, Insurance policies
and Reimbursement schemes
• TECHNOLOGY: Acceptability of New technology in healthcare Sector, Data
Privacy Issues, Usage of Authentication services, No ecosystem or dedication
integrated platform in Health care sector
• ENVIRONMENT: Not in scope of this Case study
• LEGAL: Not in scope of this Case study

7
 S.W.O.T

• Huge brand name in • Working in Silos-

healthcare Redundant data, less
• Core competency operation efficiency.
Strengths Weaknesses • Legacy System
• Huge client base

Internal
• Capable IT Team • Non-agile way of
product development
• Untapped Market with • Insurance and
zero competition Healthcare Policies
• Increasing Healthcare • Ambiguity in
cost & Aging population Opportunities Threats reimbursement model
(demographics) • Acceptability of new

External
• Less budget on Technology in
Preventive measures healthcare sector
Positive Negative
SWOT Analysis

Opportunities Threats
• Use of current IT
• Leverage First mover
capabilities to offer
Strengths value added integrated
advantage to capture
market.
solution
• Reach out to the existing
• Train Internal workforce
clientele to buy-in
Weaknesses • Provide customer
customers for new
centric solution
solution
 Vision, Mission and Business Strategy

Vision Mission Business Strategy

To use Innovation To improve healthcare • To shift its business from selling
to improve life of outcomes at lower medical products in a transactional
3 billion people costs by providing end manner to providing integrated
by year 2025. to end integrated healthcare solutions .
healthcare solutions • Philips created a new segment of
and shift industry connected health care tech.
focus from treatment • Bridged the gap between untapped
to prevention. demand
• Added incremental value to all
stakeholders in a consumer life cycle
10
Blue Ocean Strategy

Red Ocean (Me Too) Blue Ocean (Me Only)

• Compete in existing markets • Create uncontested market space

• Beat the competition • Make the competition irrelevant

• Exploit existing demand • Create and capture new demand

• Make the value-cost trade off • Break the value-cost trade off

• Align the firm value chain to the • Align the firm value chain to seeking
overall strategy (low cost or both differentiation and low cost
differentiation or focus)
11
Integrated Solution

Philips integrated solution Business can be broadly

divided into 2 parts:
• The Component : create components
• The Solution: assemble hardware, software and
services.

To ensure reusability and interoperability, single

digital platform was developed and named HSDP
and CDP2.

12
Modular Architecture
API API

B
B
P
B Philips
P P
B integrated
P
platform
B
P

AWS
(HSDP)

DATA

SERVICES( CDP2)

PEOPLE 13
 Modular Architecture

Use
MODULAR
Case
Break the effort into chunks
Use
(use cases)
API Case
Use
Case

API Use

Use
Use
Case
Case
SCALABLE
Case
Use
Business Process 3 Think through how the
Case
roadmap will evolve
Use
Case Business Process 2
Use
Case

Business Process1

Individual Business Modules were interconnected using

EXTENDABLE
API on a common platform. Accommodate changes as they
develop
 Integration of BP through API

• Allow your product or service to talk to each other

• Users access your data from outside the firewall
• Used to integrate websites and systems with one another.

15
 Business Process Standardisation

AI

IOT

BUSINESS BUSINESS
HSDP /CDP2 Connected
PROCESSES PROCESSES devices

Mobile
People

Products

Connected
Processes
API
 IMAC

IoT Mobile Analytics Cloud

17
Modular Architecture

School of thought
3
2017

2
1
Centralization
Centralized Decentralized

2011

18
DFM Strategy

Digital Disruptions

ICT Strategy

19
Value Chain (2017)

SUPPORT ACTIVITIES
Firm Infrastructure
Human Resource
` Management -Training

Technology -18 Solutions Delivered

Procurement

Inbound Operations
OperationsOutbound Marketing
, Outbound Logistics, Service
Service
Logistics Sales Logistics
and Marketing & Sales
Silos Not in sync
Less Efficiency
Jointly responsible between P&Lwith the
of the
Redundant Data product
product and thus in sync with each other,
Multiple Tech division team
thus leading to efficiency and reducing
redundancy
ICT

Connected Digital Platform & Proposition (CDP2)

ICT
HealthSuite Digital Platform (HSDP)
20
 ICT – from alignment to co-evolving

• IT role has changed from order

taker to business creator
• From facilitating business process
to directly connecting with
customer
 Channel/Product Matrix 2017

PRODUCT
PHYSICAL DIGITAL
CHANNEL

PHYSICAL

DIGITAL
 Digital Transformation Journey

Reusability –
Building
solutions
on the
Complexities components HealthSuite
and Silos already Labs

2011 available
2014 2017
2010 ‘Accelerate’ 11-14 Introduction 14-17 Standardization
and
Program of HSDP
division into 3
(PIL) and CDP2 on
Business
Cloud
Clusters
and
API enabled
approach
HealthSuite Video
Stay Healthy Stay Connected

Thank You
&

26